U.S. Treasury Secretary Bessent Demands Crypto Regulation, Threatens Industry Exodus

VADODARA, February 5, 2026 — U.S. Treasury Secretary Scott Bessent escalated regulatory rhetoric, telling cryptocurrency market participants who oppose strong oversight to "move to El Salvador." This latest crypto news emerged during a congressional hearing where Bessent advocated for the CLARITY market structure bill. He emphasized bipartisan discussions could pass the legislation this year.

Investigation: Regulatory Pressure Intensifies

According to a CoinDesk report cited by Coinness, Secretary Bessent criticized industry skeptics without naming individuals. He targeted those preferring no regulation over the proposed CLARITY bill. Bessent stated the Senate must pass this legislation for U.S. crypto industry development. He argued for introducing safe, sound, and prudent practices under government oversight while preserving cryptocurrency freedoms.

Market structure suggests this rhetoric aims to consolidate regulatory control. Consequently, institutional liquidity may face increased compliance costs. Underlying this trend is a push for standardized reporting akin to traditional finance frameworks.

Market Context & Historical Precedent

Historically, U.S. regulatory announcements trigger volatility. The 2021 Infrastructure Bill debate caused a 15% Bitcoin correction. In contrast, the 2024 ETF approvals fueled a rally to all-time highs. Bessent's comments coincide with extreme market fear, scoring 12/100 on the Crypto Fear & Greed Index.

This regulatory pressure mirrors global shifts. For instance, recent developments include U.S. Treasury scrutiny of China's digital asset rumors. , Russia's Sovcombank launching Bitcoin-collateralized loans shows alternative jurisdictional responses. These events highlight a fragmented regulatory influencing capital flows.

Technical Architecture & Price Action

Bitcoin trades at $66,382, down 8.08% in 24 hours. On-chain data indicates increased exchange inflows, suggesting selling pressure. The Relative Strength Index (RSI) sits near oversold territory at 28. A Fibonacci retracement from the 2025 high of $98,450 to the 2024 low of $52,000 shows key support at the 0.618 level ($67,200).

Market structure currently tests this level. Volume profile analysis reveals a high-volume node at $65,000, acting as critical support. A break below invalidates the bullish structure. The 200-day moving average at $70,500 serves as dynamic resistance. Regulatory news often creates Fair Value Gaps (FVGs) in price charts, which markets later fill.

By The Numbers

Why It Matters

Regulatory clarity dictates institutional adoption. The CLARITY bill could standardize custody, reporting, and market operations. According to the U.S. Treasury's official policy framework, such measures aim to mitigate systemic risk. Consequently, compliant projects may attract capital, while others face delisting or jurisdictional shifts.

Market analysts note parallels to the 1930s Securities Act. That legislation established transparency, eventually fostering decades of equity growth. Similarly, defined crypto rules could reduce regulatory arbitrage, stabilizing long-term valuation models. This impacts Layer-1 blockchains like Ethereum, which must adapt consensus mechanisms to compliance requirements.

Expert Commentary

"Secretary Bessent's remarks reflect a strategic pivot toward formalizing crypto within existing financial oversight. The reference to El Salvador a binary choice: adopt U.S. standards or seek less regulated jurisdictions. This pressures market participants to align with forthcoming rules, potentially accelerating institutional onboarding once clarity emerges." — CoinMarketBuzz Intelligence Desk

Market Outlook & Price Scenarios

Two data-backed scenarios emerge from current market structure.

• Bullish Invalidation Level: $70,500 (200-day moving average). A sustained break above this resistance confirms trend reversal, signaling regulatory uncertainty priced in.
• Bearish Invalidation Level: $65,000 (high-volume node). A close below this support indicates continued sell-off, driven by regulatory fears and liquidity outflows.

The 12-month outlook hinges on CLARITY bill progression. Passage could initially cause volatility but ultimately provide framework for institutional investment. Historical cycles suggest regulatory resolutions precede multi-year bull markets, as seen post-2017 ICO crackdown. Consequently, the 5-year horizon may see increased ETF inflows and standardized DeFi protocols.